Bad loans mess: Public sector banks' NPAs soar 1.5 times to Rs 6.89 lakh crore over two years

By Bhasker Tripathi New Delhi:  Indian public sector banks’ (PSB) bad loans soared 1.5 times, from Rs 2.67 lakh crore ($39.99 billion) on 31 March, 2015, to Rs 6.89 lakh crore ($103.21 billion) – an amount that could electrify half of India’s households – on 30 June, 2017, according to this reply to the Lok Sabha  (lower house of parliament) by Shiv Pratap Shukla, minister of state for finance, on 6 April, 2018. Of the 21 public sector banks, 11 had non-performing assets (NPAs) greater than 15 percent of total assets, as per data cited by the minister. In light of the Rs 11,000 crore fraud at Punjab National Bank, the Reserve Bank of India (RBI) has placed all 11 under scrutiny, The Financial Express reported on 9 April, 2018. Five more PSBs are expected to join the ranks. Demands that PSBs be privatised have also been reinvigorated since the fraud was unearthed in February this year. [caption id=“attachment_4325307” align=“alignleft” width=“380”]  Representational image. Reuters[/caption] Among other corrective action, the RBI will restrict their lending activities, opening up of new branches and recruitment. Indian companies and individuals owed Rs 4.1 lakh crore ($61.41 billion) to PSBs in overdue loans in the “non-priority sector”–mainly corporate lending, car loans, personal finance, credit card dues and home loans–as of March 2016. These NPAs, if fully recovered, would suffice to pay off distressed farm loans across eight states, with a third (32 percent) still left over, IndiaSpend had reported on 31 July, 2017. In the decade to 2016, bad loans in the non-priority sector rose more than 22-fold (2166 percent) from when they were valued at Rs 18,300 crore in 2006, the report said. During the same period, the sector’s share in public sector banks’ NPAs rose from 44.2 % to 76.7%. This growth was particularly pronounced after 2011, when it became 12-fold (1110 percent) over five years.

Data sourced from Lok Sabha and Financial Express; Data as of 31 December, 2017(Note: The numbers related to electrification are arrived at by multiplying Rs 3,000 per household, the amount the central government is providing for electrification under the Saubhagya scheme, with the overall number of households in the country.)